Stratege,
The initial production cost has been estimated to be US$805.85 for the 20 GB model and US$840.35 for the 60 GB model;[35] however, they were priced at US$499/C$549 and US$599/C$659, respectively.[36] The high manufacturing costs mean that every unit is sold at a loss of approximately $250,[35] contributing to Sony's games division posting an operating loss of ¥232.3 billion (US$1.97 billion) in the fiscal year ending March 2007.[37] In April 2007, soon after these results were published, Ken Kutaragi, the head of gaming at Sony, announced plans to retire. Various news agencies, including The Times[38] and The Wall Street Journal[39] have reported that this was due to poor sales, whilst SCEI maintains that Kutaragi had been planning his retirement for six months prior to the announcement.[39]
Since the console's launch production costs have been reduced significantly as a result of phasing out the EE+GS chip[40] and falling hardware costs.[41][42] The cost of manufacturing Cell processors has fallen dramatically as a result of moving to the 65nm production process[43][42] and Blu-Ray diodes are now around $100 cheaper to manufacture.[41][44]
The cumulative reduction in production costs is as follows:
Blu Ray (cost reduction: US$100)
Cell (cost reduction: US$29 - US$40)
EE+GS removal (cost reduction: US$27)
Chipset Modifications: Sony have removed a CXD9208GP, 2 RDRAM chips(US$5), and some passives and are
planning "the unification of separate smaller ICs - such as bluetooth and WiFi - into single chip solutions and a change to a more specialized Southbridge." (cost reduction: unknown)
This brings the total cost reduction to at least $156 excluding the chipset modifications.
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